Juneau – Today, the Alaska House of Representatives approved House Bill 247 to significantly reform Alaska’s unsustainable oil tax credit subsidy system. The members of the Alaska Independent Democratic Coalition (AIDC) cautiously supported the legislation after participating in a bipartisan effort to amend the bill to dramatically increase savings and fix flaws included in previous versions of the bill.

“The current system of paying hundreds of millions of dollars a year to the oil industry through tax credits and other subsidies is contributing to Alaska’s fiscal crisis and must be fixed,” said AIDC Leader Rep. Chris Tuck (D-Anchorage). “There is still a lot of work to do to ensure Alaskans receive a fair share from our shared oil resource, but true leadership demands compromise, and that’s exactly what we have done with this bill. It’s not perfect, but it’s a step in the right direction towards protecting our economy.”

HB 247 was originally put forward by Alaska Governor Bill Walker, and his version of the bill would have offset Alaska’s fiscal gap by approximately $500 million. Over the course of the legislative session, the bill was dramatically changed through the Republican-controlled committee process to eliminate savings and new revenue in favor of concessions to the oil and gas industry. However, the amended version of the bill approved today includes provisions that will save Alaska over a billion dollars in oil tax credit subsidy payments by 2020. One of those provisions would eliminate the ability of large oil producers to carry forward losses to future years to offset the payment of billions ​of dollars in production taxes owed to the State of Alaska.

“In the past the oil industry has been very successful in lobbying for a system of subsidies and concessions that helps their bottom line but hurts Alaska’s,” said House Finance Committee member Rep. David Guttenberg (D-Fairbanks). “With today’s vote, the Alaska House of Representatives has reversed course by changing from a system that props up big oil to a system that acknowledges that the oil resource is owned by the people of Alaska and their interests should be protected above all else.”

Alaska’s oil tax credit system has become a huge cost driver and is now the third largest state expenditure behind education and the Alaska Department of Health and Social Services. Educating children and ensuring access to healthcare are essential state functions, but subsidizing the risk of the oil and gas industry is not.

“I am not prepared to cast a vote to take money out of the pockets of individual Alaskans through taxes or a cut to Permanent Fund Dividends while we subsidize big oil to the tune of hundreds of millions of dollars a year into the foreseeable future,” said Rep. Dan Ortiz (I-Ketchikan). “Today’s bipartisan amendment to HB 247 made this a bill I could support because it ends many of the unsustainable subsidies to the oil industry that are making the fiscal crisis worse. It is my hope that HB 247 becomes the cornerstone of a broader fiscal plan that will right our fiscal ship and put Alaska on a prosperous path into the future.”

The Alaska House of Representatives passed HB 247 today by a vote of 25-12. The bill now goes to the Alaska Senate for consideration.